FIND WAYS TO BUILD ON WELFARE-REFORM SUCCESS

Faced with a looming loss of her benefits, an unmarried Green Bay mother found the first job outside her home that she ever had in her life.

But, after receiving her first paycheck, she became angry. She said she was going to quit. She was being cheated, she told her caseworker. Her employer was not paying what he promised.

After examining her pay stub, her caseworker quickly figured out the problem. Nobody had warned the woman about something called withholding taxes.

The woman listened intently as her social worker explained how state and local governments collect payroll taxes to pay for schools and highways and, yes, Aid to Families with Dependent Children, more commonly known as "welfare." Soon the woman decided that this tax thing was not so bad after all. She stayed on the job.

That's life in the world of work. One paycheck and already she's complaining about taxes.

I heard quite a few stories like that this month from social workers and other service providers at Wisconsin's annual Governor's Employment and Training Conference in Madison.

Unfortunately, along with the good news, I also heard horror stories about overcrowded shelters and depleted food banks this past winter in Milwaukee. There also have been bureaucratic snafus that mistakenly dropped qualified recipients from the rolls before their paperwork was processed.

But even the critics say, however begrudgingly, that the horror stories have not been as horrible or widespread as many feared. So far, the good news has far outweighed the bad.

If you want to study what works in welfare, Wisconsin is a great place to start.

Even before President Clinton signed a highly controversial welfare reform bill that handed off the national safety net to the laboratory of the states last year, Wisconsin was taking the lead in moving residents from welfare to work.

Since the beginning of 1993, Wisconsin has reduced its welfare rolls by 49 percent, followed by Oregon's 43 percent and Indiana's 42 percent.

Nationwide welfare rolls dropped 20 percent during that period, to 11.3 million people from 14.1 million, the largest drop in the past 20 years.

The big questions left hanging are: Why have the rolls dropped, how much farther can they drop and could they go back up?

The causes of the welfare decline are hard to pin down, according to an analysis the President's Council of Economic Advisors released on Friday. Yet the report gives a good try. It attributes 40 percent of the decline to the five-year-old economic boom and about a third to federal waivers that freed state governments to experiment. The rest it attributed to a variety of factors that eased the transition from welfare to work, including expansion of such important working-poor benefits as the earned-income tax credit.

Significantly, the biggest successes have come in states that now sanction recipients who do not comply with work requirements, according to the council. Although it's hard to tell just how many have fallen through the cracks, "doubled up" with relatives or gotten married to a new income provider, most appear to have entered the world of stable work, many for the first time.

Politically that's good news for all sides. Tough-minded governors like Wisconsin's Republican Tommy Thompson are beginning to look like miracle workers. The Republican Congress no longer looks as heartless as it did when it pushed for drastic reforms. President Clinton no longer looks as cynical as he looked when he signed the Republican-sponsored bill that openly outraged liberals in his own administration.

But if 40 percent of the decline in welfare rolls is a direct result of the healthy economy, what happens to those recipients when the economy turns unhealthy?

That question still concerns Heath and Human Services Secretary Donna Shalala, she said in a press briefing in Washington with Janet Yellen, chairman of the Economic Council. But fortunately, she adds, the 20 percent drop in the rolls has delivered a big bonus to the states in welfare savings that many are socking away in anticipation of future needs and to reach those welfare recipients who have fallen through the cracks or otherwise failed to reap the benefits of reforms.

"This is going to be the most studied social policy of any in the past 20 years," Shalala said. Numbers will have to be crunched and families followed. It is still too early to tell whether the first wave of success stories is just the cream and how difficult the next wave will be.

Sanctions impose a big stick not only to force welfare recipients to work but also to push social workers to help recipients move into the world of work, a world that is quite foreign and confusing to many.

That's a complicated task and, as Gov. Thompson has often pointed out, it can't be done on the cheap. It costs more money, not less, to implement true welfare reform. But so far, at least, it appears to be paying back some big dividends. Some of those dividends can be measured in dollars. Others can only be measured in rescued lives.